Unless you've been living under a rock you will have noticed that interest rates have gone up again - and of course everyone wants to blame any party but themselves for their impending bankruptcy because of it.
I have recently bought my first home with my partner and am just getting used to the term "mortgage", so I completely understand what a rate rise means for us and many of my fellow home owners. It's certainly a struggle to buy and pay off property in Sydney, while still trying to live a decent lifestyle and put money away for a rainy day, or perhaps a family. Holidays - forget them for now. Personally, it's a reality we've been forced to accept.
Though the cost of living is expensive for all of us, I don't particularly like reading or hearing the sob stories from people who have simply over-extended themselves, and really, need to assess their budgeting and financial planning skills before they go pointing the finger at the government. When you look closely at some of these people's circumstances, you only have to do a few very simple sums in your head to realise that they have bitten off more than they can chew from the get-go.
When buying and paying off any sort of significant debt, some people just don't seem to appreciate what sacrifice means....and that you might have to make a few in order to have certain things by a certain time. It amazes me that lots of home buyers don't factor into their loans the possibility that interest rates will change - and can you afford it if they do? Lenders will probably offer you a lot more money than what you expect - but can you afford the repayments?!
A story on Channel Nine's Sunday program last week illustrated the danger of pursuing the very best of everything when you simply can't afford to maintain it. Australians are now world leaders when it comes to the amount of hours the average person works in a week. One expert put this down to us simply wanting more money, that people have just become too materialistic. Not surprisingly, these people are not happier because their debt suffocates them. Living outside their means has decreased their quality of life, not improved it.
So when is the media going to stop blaming everyone but the home owner when interest rates increase? Sure, there are lower income earners who are going to be genuinely affected by this rate rise and of course this is very sad for them - I hope I am not one of them down the track - but to those who have just over-indulged and not planned ahead - shouldn't you forfeit your right to complain?
RECOMMENDED READINGS
"Big houses, small families"http://www.smh.com.au/news/national/big-houses-small-families/2007/08/07/1186252679874.html
"Addicted to work"http://sunday.ninemsn.com.au/sunday/cover_stories/article_2270.asp
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Comments
You're right
Media sob stories about spoilt yuppies who've borrowed too much and now find themselves squeezed by higher interest rates must be the least interesting things on TV, and in Australia that's a very high bar to get over. Mortgages are a long term investment and obviously rates can vary, so to whine about having to give up a restaurant meal once a month to pay slightly higher charges merely marks the complainer out as a fool.
There is a trend in modern culture that holds any notion of individual responsibility as politically incorrect, argues that anything that goes wrong in anyone's life is someone else's fault and that everyone is entitled to 'compensation' for everything. This is of course ludicrous. If interest rates are kept too low then inflation, which punishes the low paid and savers, simply takes control. Freedom means the freedom to make mistakes too and to take the consequences of them.
What's the worst that could happen ? Trendy dinner parties will now be thronged by bores wittering on about negative equity' rather than boasting about how much their house went up in value last month. It's a small price to pay for the monetary policy which has banished inflation from the public imagination, never mind the economy, and led to two decades of stable economic growth.